Trump Administration Strikes Major Trade Deal With South Korea
NOEL KING, HOST:
The Trump administration has struck its first major trade deal. It's with South Korea. That country is the third-largest exporter of steel to the U.S. And this new deal exempts South Korea from the steel tariff that was announced this month. And in return, South Korea agrees to reduce the amount of steel it exports to this country. The deal also includes some measures designed to let American car companies do more business in Korea and to keep Korean pickup trucks out of the U.S. Here to discuss the deal is Peter Navarro, the White House trade adviser.
Welcome to the show, sir.
PETER NAVARRO: Pleasure to be with you this morning.
KING: All right. Here's my big question. Why impose steel and aluminum tariffs on the world if you then gradually chip away at them? You've exempted Canada, then Mexico and now South Korea.
NAVARRO: The steel and aluminum industries, as President Trump has said, are pillar industries. Without those industries, we don't really have a country. And so putting tariffs on what was effectively 20 countries for steel and 15 for aluminum is absolutely essential to protecting our national security. It's a misconception that we let anybody out from those tariffs. What we have simply is a temporary exemption till May 1 while we negotiate with other countries to see what alternatives they might propose.
In the case of South Korea, this is absolutely a home run. In lieu of tariffs on steel, we have a quota, which is equal to only 70 percent of their shipments from the last few years. And this will be as effective as the tariff and preserve the integrity of the steel industry. So let's not talk about exemptions, letting anybody out. Everybody understands as they negotiate with the United States that if they're let out of the tariffs, they will have a quota or some other similar restriction.
KING: All right, so those restrictions do remain to be seen. The trade orthodoxy for a very long time has been to try and loosen barriers, to get more American goods out into the world. I mean, a lot of economists will tell you this. Do we not risk hurting our export economy if our philosophy is now about making it harder to trade?
NAVARRO: If you look at the Korea deal, which is - this is really historic. But let's be clear about what's going on here. In 2012, the Obama administration negotiated what is up there as one of the three worst deals in American trading history - NAFTA, China's entry into the World Trade Organization, but the Korea deal is right up there because our trade deficit literally doubled in four years without a single dollar of additional exports. What we've done here historically is have an agreement where now we can sell more cars to Korea. They're going to lower their trade barriers. We're going to be able to sell more high innovative pharmaceuticals and we're going to be able to defend ourselves against currency undervaluations because as part of this deal, there's a very nice side deal agreement that the secretary of treasury is negotiating over currency undervaluation.
KING: Over currency undervaluation. But...
NAVARRO: So this is free and fair trade as we see it. And it's a benchmark for what we'll be doing going forward.
KING: But to be fair, South Korea and America have a unique relationship. America has a lot of leverage with this country. I mean, do you really think this is a model that's going to work with countries where we don't have as much sway?
NAVARRO: Look, we have a trade deficit with the world that's over $500 billion a year. We have Europe - $150 billion a year. China, $370 billion. That's leverage on our end because we need to have that level playing field. And that's what we're going about. Fair and reciprocal trade - that's all the president's trying to do in a very innovative and visionary way. We seek peace, but we seek fairness and reciprocity.
KING: All right. And I suppose we'll see how it works with other countries. Last question for you - the stock market has been pretty volatile lately - a lot of people concerned about a trade war with China. Is there anything you can tell us to ease people's concerns that a trade war is coming?
NAVARRO: Well, today's news, which is historic, it illustrates that we can have trade peace with our major allies in a way which not only ensures economic security with Korea but also national security. This is an agreement that's really going to bring us closer together as two nations. And that's the model we're seeking. So the Trump economic plan is full growth ahead, deregulation, tax cuts, trade rebalancing and unleashing our energy sector. And that's bullish for the economy.
KING: All right. That's White House trade adviser Peter Navarro. Thank you very much, sir.
NAVARRO: Thanks a lot.
KING: Joining me now in studio is NPR senior business editor Uri Berliner.
URI BERLINER, BYLINE: Hey, Noel.
KING: So is this approach that Navarro described likely to get the results that the president wants?
BERLINER: Well, it depends what the objective is. If the objective is to protect American steel jobs, it’s going to be a real challenge. And keep in mind that America still produces a lot of steel, but the number of workers in that industry has been falling for decades now. And if there are exemptions to these tariffs, even if they’re temporary or they may be extended, you have to wonder how much protection these workers will have with these tariffs.
KING: What are some of the signs we should look for to see if this strategy is working or to see if it’s backfiring?
BERLINER: Well, we want to see whether these exemptions are extended or not. If they’re extended, that may lessen the trade tensions, but it won’t necessarily provide the protection to the domestic steel industry, and it won’t provide the same level of protection to workers in that industry. So if it – if we look at jobs, we’re going to look at whether these exemptions are extended or not. If we look at trade tensions, extending those extensions will probably cool things down a bit.
KING: NPR’s Uri Berliner, senior business editor, thank you.
BERLINER: You're welcome.
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